Wilson County’s proposed half-cent sales tax increase on the Thursday ballot for voters to decide could be replaced by a similar Lebanon referendum in September if it fails.
Wilson County Mayor Randall Hutto said it was Lebanon officials who originally asked for the sales tax increase to be placed on the current ballot as a referendum. However, unlike in November 2012 when Lebanon voters turned down a half-cent sales tax increase dubbed Pennies for Progress, the Wilson County Commission got involved in this go-around.
“The city initiated this,” Hutto said. “[The Lebanon City Council] voted to do that and put it on the ballot. The law states that if the city decides to do this, the county gets to opt in or out.”
Talk about the proposed sales tax increase has generally been quiet during the election cycle that culminates Thursday with the county’s general election. Hutto said it’s for good reason, because many county officials, including himself, aren’t for promoting a tax increase of any kind.
But Hutto said the half-cent sales tax increase that would generate about $6.2 million countywide annually would create a strong enough revenue source for education that a property tax increase would be deferred for quite some time.
He said many people he talks to prefer a sales tax increase largely because it’s the fairest tax around. He said everyone, including visitors to the county, pays sales tax while about 45,000 people pay property taxes and about 110,000 people pay wheel taxes in Wilson County. The commission can only adjust property taxes itself while sales and wheel tax changes require referendums.
If voters pass the county’s half-cent sales tax increase proposal, half the money generated would go to both Wilson County and Lebanon schools. The remaining amount would be divided among the three municipalities – Lebanon, Mt. Juliet and Watertown – and the county based on amounts collected in each. Even the county’s portion of sales tax collected goes to education debt services to pay for capitol building projects.
Because 65 percent of the county’s budget goes to Wilson County schools, Hutto said that’s the reason why property taxes would remain unchanged.
However, if voters turn down the county’s proposed sales tax increase Thursday, Lebanon Mayor Philip Craighead said he plans to bring a half-cent sales tax referendum before city voters in September.
A resolution was on the Lebanon City Council’s Tuesday meeting agenda that would set the dates for a special election with the sales tax referendum as the sole item on the ballot should the county’s proposed hike fail Thursday.
The resolution called for the city referendum to be Sept. 23 at a cost of about $25,000. Early voting would be Sept. 3-18.
Craighead said the half-cent sales tax increase would generate about $4.2 million annually if it’s passed solely in Lebanon instead of countywide. All of that money would go to Lebanon instead of a split with the schools unlike the county’s referendum on Thursday’s ballot.
Craighead said the estimated funds generated annually for the city could mean about a 20-cent reduction in Lebanon’s 60.75-cent property tax rate. Property taxes were raised last year in Lebanon for the first time in more than two decades.
“Give us an opportunity to reduce our property tax and give other people who visit the opportunity to pay into what we are doing here,” Craighead said.
Craighead said the property tax reduction would be a $1.6 million annual reduction in tax revenues coming into the city and would leave money for a new fire hall and more aggressive paving throughout the city.
Craighead also called sales tax the fairest option since about 70,000 cars a day pass by Lebanon on Interstate 40, and those visitors stopping in the city to buy gas and other items would play a factor in who pays sales tax, not solely residents.
If voters pass either the city or county sales tax increase, it couldn’t be raised again without a change in state law. Either would push the sales tax rate to 9.75 percent, which is the most currently allowed in Tennessee. If Lebanon’s referendum were to pass, the county could opt in with another referendum to make the sales tax increase countywide, according to state law.